Question

Problem 9-20 Activity and Spending Varlances [LO9-1, LO9-2, LO9-3] You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Actual Cost in Cost Formula March $16.400 + $0.13 per machine- 20,930 hour $38,100 + $1.20 per machine- $ 57,100 hour $0.50 per machine-hour $ 10,300 $94,100 + $1.30 per machine- $ 122,300 hour $68,100 69,800 Supplies Indirect labor Depreciation During March, the company worked 19,000 machine-hours and produced 13.000 units. The company had originally planned to work 21.000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the activity variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) FAB Corporation Activity Variances For the Month Ended March 31 Utilities Maintenance Supplies Indirect labor Depreciation Total < Required 1 Required 2 >

Answer 1

FAB Corporation Activity Variances For the month ending March 31 Machine hours (9) Utilities ($16400 + $0.139) Maintenance ( $38100+ $1.20q) Supplies ($0.500) Indirect Labour ($94100+ $1.309) Depreciation ($68100) Total Flexible Budget 19000 18870 60900 9500 118800 68100 276170 Planning Activity Budget Variances 21000 19130 260 F 63300 2400 F 10500 1000 F 121400 2600F 68100 0 None 282430 6260 F Spending Variances Machine hours (9) Utilities ($16400 + $0.13) Maintenance ( $38100+ $1.209) Supplies ($0.500) Indirect Labour ($94100+ $1.30q) Depreciation ($68100) Total Actual Results 19000 20930 57100 10300 122300 69800 280430 Flexible Activity Budget Variances 19000 18870 2060 U 60900 3800F 9500 800U 118800 3500 U 68100 1700U 276170 4260 U